JERUSALEM - Israeli Prime Minister Ehud Olmert should be indicted for an alleged investment scheme to divert state money to a former law partner, police said Thursday.

National Fraud Unit police in Jerusalem said sufficient evidence exists for Attorney General Menachem Mazuz to charge Olmert with fraud and breach of public trust for his alleged role in the scheme while trade minister under former Prime Minister Ariel Sharon.

Olmert allegedly channeled state development grants to a company represented by former Olmert law partner and close associate Uri Messer. Police called it a "deep conflict of interest."

Olmert spokesman Amir Dan blasted the recommendation, claiming Olmert's only goal was the betterment of the state, The Jerusalem Post reported.

Messer had no immediate comment.

The outgoing Israeli prime minister faces six simultaneous investigations, and has denied wrongdoing in each one. The development-grants indictment recommendation came less than a week after Mazuz said he would charge Olmert in a separate case involving bribes, money-laundering and fraud with U.S. businessman Morris Talansky.

Talansky, 76, of Woodsburgh, N.Y., testified in Jerusalem last May he gave Olmert about $150,000 over 15 years, much of it stuffed into envelopes.